I wish I had a dollar for every time someone asked me, “Real estate is going up, right?” “How much is my property worth, more than last year … right?” And this one: “What will the market be like three years from now?”
To be very up-front: I don’t know. No one knows. We can make assumptions -- we want or, I should say, we need to believe that the real estate market will go up. But if you’re still unsatisfied with that response, here’s your straight answer.
The market has entered a normalized, stable period. Six to seven years ago, most homeowners had an imaginary gold bar in their hand -- their property. Easy access to funds was the status quo, as banks issued loans right and left without worry, since they could resell these loans without worries, too. For some, that was life: buying and acquiring whatever they wanted, needed or not. It was nice to acquire funds without any effort (a complete fiction), but where in the history of the world can you acquire anything without working for it (the hard reality)? We all watched this fiction became a monster, and everyone woke up with way too much to repay.
Here is what I know: If you decide to sell, find the real motivation behind that decision. Whether it’s moving up or down, a job transfer, kids, divorce, death in the family, or just a need for a change of scenery, search for that deep reason. This is the key that will trigger everything -- the numbers will follow.
If you ask me whether you’ll make money with your property purchase, I will say to you a big “YES.” But how much? That is the real question. Here’s the straight answer to that one: If you maintain your home or condo -- update, paint, clean, landscape -- basically manage your investment like you would a stock, bond, or CD, I can tell you yes, you’ll profit from your purchase at a rate of 6 to 8% a year! That’s much better than banks investments or stocks.
Remember the saying, “If it’s too good to be true, it’s because it’s not”? That’s what happened at the start of the real estate inflation that caused so many headaches. So now let’s look at numbers -- real numbers. My statistics come from the MLXchange Report as of April 1, 2014. Let me clarify: If a sale was entered on April 1 at 8:30 a.m., it counts for April; if the sale was backdated to March 31 to make the first quarter look good, I don’t count it. Period.
First, how many properties (homes, condos, townhouses, villas) are listed for sale in Sarasota County as of March 31, 2014?
- 4,594 in total -- 3,010 single-family homes and 1,430 condos. As you can clearly see, we do have inventory. Now, we might have less in certain price ranges because REOs or bank-owned properties have been liquidated. This is why the market has stabilized.
How many properties valued at $1,000,000+ are available as of March 31, 2014?
- 469 single-family homes and 66 condos.
Now, let’s take a look at the number of properties SOLD -- the most important statistic of all -- in the first quarter of 2014. Remember my rule on the statistics: no inflated numbers here.
- 2,631 properties sold -- 1,734 single-family homes and 879 condos.
- In the $1,000,000+ bracket: 55 single-family homes and 40 condos.
The next important thing to examine is what happened in 2013, right? This will tell us where we stand. What I will tell you is, again, the honest truth. No BS -- only straight talk.
In the first quarter of 2013, 2,685 properties -- including 1,691 single-family homes and 893 condos -- were sold. This also included 47 single-family homes and 30condos in the $1,000,000+ bracket.
Interesting numbers, aren’t they? We see fewer sales this year than last year’s first quarter -- 54 fewer properties with 43 fewer single-family homes -- but more sales in the $1,000,000+ range, with 18 more sales in 2014.
Is it bad? Is it good? It’s actually neither. It simply tells us that if you have a property valued over $1,000,000 for sale -- or if you’re thinking of selling -- I will have to execute a different marketing strategy to accomplish your goal, and buyers are moving in high-end property.
My conclusion: When you purchase a property, you must treat it as an investment -- keep maintaining it and work to increase its value. We are in the reality now -- no more fiction with loans falling from the sky for people to spend on everything and anything. Normal value appreciation is on the way.
I am neither an economist nor a crystal ball reader -- I am a hard-working luxury real estate consultant who looks at the facts of today and yesterday to give you the best approach and advice for the sale of your property. Thank you for reading! I invite you to share your thoughts and feedback and keep the discussion going with me on Action Realty's Facebook page.